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Posts Tagged ‘Credit Bureaus’

The credit score is a number based on credit report statistics. It is a brief account of the creditworthiness of a person and it helps determine whether that person is eligible for financing. It also is necessary to determine how well a person is at paying off monthly obligations.

Usually the number of a person’s credit score is based on information on file with certain credit bureaus. It is a number that is often used by lenders such as banks and credit card companies to determine how credit worthy a person really is.

Other companies that use a person’s credit score to determine how trustworthy they are with money include the following:

• Mobile phone companies
• Insurance companies
• Employers
• Landlords
• Internet service providers
• Retail stores

In just about any situation such as when a person applies for a “90 day same as cash” loan to pay off furniture a credit check is often done. This often requires a look at a person’s credit score in order to determine if a person could truly pay off a loan within 90 days.

Interpretations

The most common and most valuable credit score interpretation is FICO. This is a number that typically ranges from 350 to 850. The number 723 is the median FICO score for Americans, and is considered above average/excellent.

Anyone that has a credit score ranging from 620 to 640 is considered a person who has a pretty good credit. Anyone below 620 is considered someone with fair to poor credit.

This FICO number is based on a variety of aspects such as:

• Outstanding debts
• Debt to income ratio
• Number of open accounts
• Number of inquiries

Other types of credit scores used today are the Experian PLUS scores which range from 330 to 830 and the VantageScore which ranges from 501 to 990. The concept is pretty much the same as the FICO number range and it is a measure of a person’s creditworthiness.

The concept of investigating credit reports is quite complex. It is done for many different reasons. Sometimes it is consumer fraud while other times it is because of identity theft.

It also could be a case where a consumer is just careless with money and has run up a “bunch” of credit card bills. It could be for any number of reasons or any combination of these reasons put together.

In any case, there is a variety of different ways that credit investigations are made. For instance, sometimes a credit report is checked. Usually this is done by way of social security number or birth date.

Other times other financial records such as bank accounts or credit cards are accessed. Of course, all of this is only done by the proper authorities who can be trusted to handle these investigations.

Investigative Concerns

Sometimes credit bureaus or other governing agencies investigate overextended consumers. However, they do not always do their own research. They sometimes hire detectives of different sorts who sift through personal records.

All of this is done in order to search for financial judgments, liens, or other “dirt” against a homeowner. If there is any negative action on a person’s record, the detective then reports this to a credit bureau.

This further puts a person in financial trouble in even more jeopardy. New information is placed on a person credit record that would prevent them from getting a mortgage, car loan, or job.

There have been legal battles in recent times as to whether or not it is lawful for credit bureaus and other financial agencies to hire these detectives. Lawsuits were even filed in various geographical locations such as New Jersey and Pennsylvania.

There are a variety of different methods and tools that are used to investigate credit. You can read about these in a future blog entry.

Identity theft is a serious matter and regular monitoring by way of a free credit report is one way to combat this problem. The frequently asked questions covered here will educate you more on how to use a free credit report and will help you understand your rights and responsibilities as indicated by the Fair Crediting Report Act (FCRA).

What is identify theft?

This may seem like a basic question, but since not everyone has been a consumer for very long they may need to really know what exactly is identity theft. This is the act of stealing someone’s photo I.D., birth certificate, social security number, credit card number, school records, driver’s license number, or even credit history in order to impersonate someone else.

Why would someone steal someone else’s identity?

Usually they may do it in order to obtain something they otherwise could not. For instance, someone might get into a school because they represent themselves by names on stolen school records. Someone may have obtained a car loan by using someone else’s social security number. The most common reason why people steal someone’s identity is to make online purchases.

How can theft of personal records be prevented?

Whenever possible, please make sure you shred all personal documents that might have vital information on it such as birth date, social security number, or driver’s license number on it. You can also have your financial history monitored by requesting a free credit report instantly online.

What is a fraud alert?

This is a procedure used to protect a person who has had their personal information stolen for some financial purpose. This lets the credit reporting agencies know that someone may be using your financial information without your permission.

How can I get a free credit report?

All you need to do is sign up with a service online that you can trust. You are allowed one copy of all three nationwide credit bureaus (Experian, Equifax, or TransUnion) if you have received an initial fraud alert. You can also receive additional copies (up to two per year) in case an extended alert is placed.

How many free credit reports am I allowed to have per year?

It depends upon how many fraud alerts you have on your file, or what type. For the initial fraud alert you are allowed one copy every 12 months, and then for the extended fraud alert you are going to be allowed two per every 12 months.